Hospitals Seething over CMS’s Proposal to Recover Overpayments

The hospitals celebration on Medicare pay cut tied to the so-called two-midnight rule was clearly short lived, as they’re now seething over a CMS’s proposal to nearly double the expected payment reduction meant to recoup overpayments tied to incorrect coding.

Background: All hospital patients are assigned to one of hundreds of DRG codes under the inpatient prospective-payment system (IPPS), a system of classifying any inpatient stay into diagnostic groups for the purposes of payment. The CMS introduced a new set of DRGs known as Medicare Severity DRGs in 2008, which was intended to compensate hospitals for more expensive care provided to sicker patients.

However, after the introduction of new codes the CMS claimed that hospitals were abusing MS-DRGs to get higher payments. By the end of fiscal 2017, Congress required the CMS to recoup $11 billion in alleged overpayments as per the American Taxpayer Relief Act of 2012.

In fiscal 2014, 2015 and 2016, the CMS initiated a 0.8% payment cut to inpatient rates and hospitals expected to see the same number again in this year’s payment rule. Industry veterans say they were shocked to see the cut rise to 1.5%.

Rick Pollack, CEO of the American Hospital Association, said “Congress was clear in its passage of physician payment reform last year that this cut should be 0.8%, but CMS ignored this directive and almost doubled the reduction. This cut poses another challenge to hospitals’ ability to care for their communities.”

CMS explained changing economic and healthcare trends upended its earlier projections and made it necessary to increase the cut. The agency estimated that another 0.8% reduction would have left the government $5 billion short of recouping the overpayments. “Some of the market basket projections have ultimately been lower than expected, and the number of hospital discharges has decreased more than expected.”

The hospital industry, though, isn’t satisfied with the explanation. Brian Murphy, director of the Association of Clinical Documentation Improvement Specialists, which represents hospital coding staff, said, “Hospitals are being penalized by CMS for complying with their own programs,”

Source: Modern Health

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